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2025 Supreme(Online)(Kar) 24255
KARNATAKA HIGH COURT
M.NAGAPRASANNA, J
BENGALURU CITY UNIVERSITY CENTRAL COLLEGE CAMPUS – Appellant
Versus
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT)-09 SOUTH ZONE – Respondent
WRIT PETITION NO. 5205 OF 2024 (T-RES)
For the Appellants/Petitioners: SRI. RAJENDRA KUMAR SUNGAY T P.
For the Respondents: SRI.K.HEMA KUMAR
Universities' activities are statutory and exempt from GST, as they do not qualify as 'consideration' under business definitions, reaffirming that educational institutions' services are non-commercial and cannot impose taxation under GST provisions.
Headnote:(A) Constitution of India - Articles 226 and 227 - KGST/CGST Acts 2017 - The petitioner sought to quash an adjudication order under Section 73(9) concerning tax on educational fees. Court held that activities of Universities, including affiliation fees, are not commercial and hence not taxable under GST. The activities are statutory and regulatory in nature, exempt from GST per Entry No. 66 of Notification No. 12/2017-CT (R). Impugned orders and circulars invalidated. (Paras 12, 15, 16, 19)
(B) GST - Exemption - Universities are educational institutions; the nature of fees collected is regulatory, not commercial. Claiming educational institutions' activities involve statutory provisions and thus cannot be deemed as taxable supply under GST laws. (Paras 16.1, 18.1)
Facts of the case:
The petitioner, Bangalore City University, contested the legality of a GST demand on affiliation fees it collected from colleges, arguing that such fees were not commercial transactions. Respondent issued adjudication orders demanding tax based on activities considered to be business under GST. (Paras 1, 2)
Findings of Court:
The Court reasoned that the core activities of the University are educational and do not constitute commercial activities, supporting this with prior judgments highlighting the non-taxability of statutory functions performed under education laws. (Paras 12.1, 18.1)
Issues: The key issues were: whether universities' activities are commercial, if they can be classified as a supply under GST, whether the fees constitute 'consideration', and the validity of circulars restricting exemptions. (Paras 12, 16)
Ratio Decidendi: Activities of Universities are not characterized as business activities under the GST framework. The imposition of tax on regulatory functions contradicts established legal principles regarding education as non-commercial. The law recognizes educational services as inherently exempt to encourage access and avoid additional burdens on students. (Paras 12.2, 18.1)
Result: Writ petition allowed; adjudication orders quashed and circulars invalidated.
| Table of Content |
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| 1. petitioner's background and context of the case. (Para 1 , 2) |
| 2. court's reasoning for the case central issues. (Para 3) |
ORAL ORDER
The petitioner is before this Court seeking the following prayers:
"a) Issue a writ in the nature of certiorari to quash the Order of Adjudication (passed u/s 73(9) of KGST/CGST Acts - 2017) bearing No.ADCOM/ENF/SZ/ACCT-09/Order-03/2023-24, dated 28.11.2023 issued by the Respondent (Vide ANNEXURE-E);
b) Declare that the respondent has no authority under the provisions of KGST / CGST Act 2017 to demand the tax from the petitioner university in respect of affiliation fee collected by it from the institutions/colleges and;
c) Grant such other relief/s as deemed fit, in the fact and circumstances of the case, in the interest of justice and equity."
2. The petitioner is Bangalore City University. It is aggrieved by the adjudication orders dated 28.11.2023 passed under Section 79(9) of the KGST/CGST Acts, 2017.
3. Learned counsel for the petitioner submits that the issue in the lis stands answered by the judgment rendered by the Co-ordinate Bench in the case of M/s. Bengaluru North University vs. Joint Commissioner of Central Tax and others in W.P.No.4254/2024 and connected matters disposed of on 22.04.2025, wherein it held as under:
"10. Before proceeding further, it would be apposite to state that the issues involved in the present petitions stand directly and squarely covered and answered in favour of the petitioners-University in the case of Goa University Vs. Joint Commissioner of Central Goods and Service Tax & Ors- W.P.No.723/2024 dated 15.04.2025, in which all the judgments, circulars, notifications etc., relied upon by the petitioners as well as the respondents were considered and the petition was allowed by the Hon’ble Division Bench of Bombay High Court which upheld the claim of the petitioner and quashed the impugned Show Cause Notices/Orders therein.
11. After having referred to the aforesaid judgment of the Bombay High Court in Goa University’s case supra, I deem it appropriate to elaborate further for the purpose of disposal of the present petitions. Accordingly, the following Issues arise for consideration in the present petitions:
(i) Whether activities of Universities are commercial in nature and can be termed as ‘supply’ in the course or furtherance of business?
(ii) Whether activities incidental to education can be brought to tax under the GST regime on the ground that it amounts to a business?
(iii) Whether the fee collected by the Universities is ‘consideration’?
(iv) Whether the activities undertaken by the Universities are statutory and regulatory in nature?
(v) Whether the services provided by the Universities are exempt from GST in terms of Entry No. 66 of Notification No. 12/2017-CT (R) dated 28.06.2017?
(vi) Whether the impugned Circulars dated 17.06.2021 and 11.10.2024 are legally valid ?
(vii) Whether the affiliation fees, PG registration fees, admissions fees, convocation fees and other sums collected by the petitioners-Universities from the College/students would be exigible to payment of GST ?
(viii) Whether the impugned Show Cause Notices and Orders warrant interference by this Court in the present petitions?
Re: Issue No. (i) - Whether activities of Universities are commercial in nature and can be termed as ‘supply’ in the course or furtherance of business?
12. Before adverting to the aforesaid issue, it is relevant to refer to the relevant statutory provisions of the CGST/KGST Act.
Section 9 of the CGST Act reads as under:
Levy and collections
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manne
